Business

Net Element: Is A Convicted Embezzler Really Their Latest Investor?

As our previous article indicated, we can only wonder why Net Element Inc. (NETE) would use MissionIR as its investor relations firm.  After all MissionIR was recently fined and subject to a Cease and Desist order from the SEC.  The SEC also said MissionIR “operated as a fraud upon investors and violated, and caused violations of, the anti-touting provisions of the federal securities law.”  If I were the CEO of a public company, I’m not sure that is the kind of IR firm I would want representing me.  Furthermore, if I were Jon Najarian or CNBC, I’m not sure I’d want to be associated with any company that uses MissionIR.

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Net Element investor relations firm

Many sophisticated investors have been suspicious of MissionIR.  In fact, Adam Feurerstein wrote excellent article which explains how at one of MissionIR’s clients, Galena Biopharma, insiders were dumping millions of dollars of stock while the company was paying MissionIR to promote the stock.

This highly questionable insider selling inspired us to look at NETE’s shareholders to see if any of them might be interested in dumping their shares while MissionIR was being paid to promote the stock.  What we found gave us even greater confidence (not that we needed it) that NETE’s stock price will fall significantly.

Despite its numerous problems, NETE does operate in a “hot” sector, payment processing.  We would expect any reputable company operating in this space to have smart, sophisticated, venture capital oriented investors who can help fund the company’s growth prospects.  NETE has indeed raised money recently, but not from parties we consider to be highly credible.  In fact, the investors that recently purchased shares from the company were related to Michael Wachs, who went to jail for embezzling money from Chase Bank, was barred from the banking and brokerage industries and then started (what we and others consider to be a highly promotional) investor relations firm called CEOCast.

A close examination of SEC filings reveals NETE recently received investments from two entities: Esouosa Holdings and Cobblestone Capital Partners LLC.  While the names of these entities sounds innocuous, the investors behind these entities may not be.

From analyzing NETE’s SEC filings, we could only find limited information about Esouosa Holdings LLC including that its Managing Member is Rachel Glicksman.  However, the SEC filings of another company indicates that “Michael Wachs is the husband of Rachel Glicksman” and that “Ms. Glicksman is the Managing Director of Esousa Holdings LLC.”    In other words, Rachael Glicksman is actually Michael Wachs’ wife.

NETE also received an investment from Cobblestone Capital Partners LLC.  The only disclosure we could find in NETE’s SEC filings about this entity is that its Managing Member is Dahlia Harmon.  However, we then found these two articles which indicate that Dahlia Harmon is Michael Wach’s  sister.

So, the last two investments into NETE were done through LLCs that just happen to be affiliated with the wife and sister of someone who went to jail for embezzling money, has been barred from the securities industry and ran a highly promotional investor relations firm.   We researched Ms. Glicksman and Ms. Harmon and could find very little evidence of them being active investors, so we can only wonder how they became investors in NETE….or why NETE couldn’t attract more reputable investors.  We also wonder how involved Michael Wachs is in these LLCs and if any involvement he may have had with NETE is legal.

The number of red flags relating to NETE continues to increase.

SHORT NETE

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